Revenue for web analytics vendors is estimated at £42m, which includes income from software licences, hosted solutions and consultancy services. Econsultancy says the remaining £43m is accounted for by web analytics-related spending on internal staff and third-party consultancy services.

Although 2009’s growth rate was down on the 12% rise in spend seen in 2008, Econsultancy said it was encouraging for the industry that it had still managed to thrive despite the recession. Research director Linus Gregoriadis said: “2009 was a very big year for the web analytics industry, with the recession forcing companies to become more efficient and to take measurement more seriously.”

Vendor revenue growth of 5% was also to be welcomed given the competition presented by free tools offered by the likes of Google and Yahoo. In the report – which is available here – Econsultancy warns that free tools risk driving competition away from the lower end of the paid-for market.

A survey last year found some 80% of companies using Google Analytics to track the performance of their website, although only 23% were using it exclusively. Econsultancy notes that 2009 saw fewer analytics players owning the majority of market share.

Lynchpin Analytics managing director Andrew Hood sees increasing polarisation in the market between one free player, Google, and one “dominant, high-end technology vendor”, Omniture – which was bought by Adobe for $1.8bn last year.

“Although there is clear competition in terms of functionality and the free tool helps keep the price of the paid tool in check, there is far more limited competition in terms of real service with fewer vendors in the picture,” said Hood.